El Paso Corporation has completed two exploration and production acquisitions in east and south Texas for $211 million. The properties involve approximately 124 billion cubic feet equivalent of proved reserves and 29 million cubic feet equivalent per day (MMcfe/d) of average net production.
Both acquisitions offer significant future drilling opportunities and fit well with El Paso’s existing operations. Approximately 59% of the reserves are proved undeveloped. Both acquisitions are being made within El Paso Production Holding Company.
In east Texas, El Paso has signed an agreement to purchase a privately held exploration and production company with operations in Rusk and Shelby counties for approximately $179 million. El Paso will acquire 52 wells and associated gathering infrastructure with 20MMcfe/d of production from the Cotton Valley and Travis Peak formations.
El Paso will also acquire six additional wells that are currently being drilled or completed, 77 proved undeveloped locations, and significant additional potential development and exploration opportunities. The transaction is subject to the approval of the seller’s shareholders.
In south Texas, El Paso purchased assets in the Samano (Vicksburg) Field located in Starr and Hidalgo counties for approximately $32 million. The acquisition includes 26 wells that are producing approximately 9MMcfe/d and the associated gathering system.
I am excited to announce acquisitions that strengthen our positions in south and east Texas, said Lisa Stewart, president of El Paso’s non-regulated operations. We are adding a significant number of low-risk development locations to our inventory as well as properties that offer additional exploration upside. We also expect to achieve operating synergies as we integrate these properties into our operations.
In light of these acquisitions, El Paso now expects its 2005 production capital budget to be approximately $900 million.